NEW YORK ( TheStreet) -- National American University Holdings (Nasdaq: NAUH) has been downgraded by TheStreet Ratings from hold to sell. The area that we feel has been the company's primary weakness has been its poor profit margins.

Highlights from the ratings report include:
  • Compared to where it was a year ago, the stock is now trading at a higher level, and has traded in line with the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • The gross profit margin for NATIONAL AMERN UNIV HLDG INC is currently very high, coming in at 77.40%. Regardless of NAUH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.20% trails the industry average.
  • The net income growth from the same quarter one year ago has exceeded that of the Diversified Consumer Services industry average, but is less than that of the S&P 500. The net income increased by 10.1% when compared to the same quarter one year prior, going from $2.10 million to $2.31 million.
  • NATIONAL AMERN UNIV HLDG INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NATIONAL AMERN UNIV HLDG INC increased its bottom line by earning $0.38 versus $0.36 in the prior year. This year, the market expects an improvement in earnings ($0.54 versus $0.38).
  • Net operating cash flow has increased to $6.05 million or 33.61% when compared to the same quarter last year. In addition, NATIONAL AMERN UNIV HLDG INC has also vastly surpassed the industry average cash flow growth rate of -36.65%.

National American University Holdings, Inc., through its subsidiary, Dlorah, Inc., engages in the ownership and operation of National American University that provides post-secondary education services primarily to working adults and other non-traditional students in the United States. The company has a P/E ratio of 29.6, above the average diversified services industry P/E ratio of 20.3 and above the S&P 500 P/E ratio of 17.7. National American University has a market cap of $204.4 million and is part of the services sector and diversified services industry. Shares are down 4.1% year to date as of the close of trading on Tuesday.

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